TyroCity: Business Studies XI Notes

Concept of an office

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Definition of an office

Office is an important pace of the organization where different functions are performed to achieve the objectives of the organization. It is the integral part of any business. If business starts to be rigid and complex, office helps by simplifying the activities and promotes the expansion of business. It is set up to handle the information and daily transactions in s systematic way. The definition of office can be interpreted in two ways. They are traditional and modern viewpoint. In traditional view, office is defined as the place where clerical functions like receiving, recording, processing and supplying information are performed. In modern view it is defined as the part of organization which involves in performing all management as well as administrative functions such as planning, policy making, organizational activities, coordination and communicating in order to achieve the objectives of the organization.

Merits and demerits of sole trading concern

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Merits of sole trading concern

1. Easy to start and dissolve:
A sole proprietorship can be setup easily and quickly. No legal formalities and expenditures are involved in the establishment of a proprietorship. There is no need to associate others or to enter any agreement. Only a license may be needed in special cases. The owner can start business operations as and when he desires.

Similarly, a sole proprietorship can be closed down very easily and quickly.

2. Motivation to work:
The proprietor is all alone entitled for all the profits and the losses of the business. He bears the complete risk and there is nobody to share the risks, workload or any profit or losses. There is direct relationship with efforts and reward. There is an incentive to work hard. The proprietor is motivated to make the best possible use of his skills and resources to maximize the profits.

3. Quick decisions:
The sole proprietor is completely free to take all decisions and to implement them. He doesn’t need to consult or seek others approval. Quick decisions and prompt actions are helpful to improve the efficiency of business operations.

4. Independent control:
The proprietor alone takes all the decisions pertaining to the business. He is not required to consult anybody. Ownership and management are vested in a person. There is no governmental intervention in day to day activities.

5. Business secrets:
The sole proprietor can keep the secrets to himself and these secrets are not known to competitors or others.

6. Personal contact:
A sole proprietor is in a position to maintain intimate contacts with his customers and employees. He can enter to the requirements of each and every customer. Close personal touch increases the competitive strength of the business.

7. Flexibility:
A sole proprietorship is small in size and has a simple management functions. Therefore, it can be adapted easily to suit the changing conditions of the market. The line of business can be easily changed or modified.

8. Economy:
The management of sole proprietorship is inexpensive. As sole proprietor himself is the manager, the cost of management is very low. Borrowing capacity is high owing to the unlimited personal liability of the owner.

9. Social utility:
Sole proprietorship provides an opportunity for gainful self employment for the people with limited money. It offers a way of earning an honorable living for those who do ot ant to work under other. It also facilitates equitable distribution of income and wealth.

Demerits of sole trading concern

Sole proprietorship has limited capital
Sole proprietor only uses his ideas and innovation capacity. So there is limited managerial ability
Sole proprietor must work more to earn more profit. Higher profit generation is important. So, there is dull and monotonous wok.
Death of sole proprietor causes death of sole proprietorship.
There is no specialization in decision taking. So there can be chances of taking wrong decisions
There is low investment resulting in limited areas of operation.

Importance of filing

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Some importance of filing:

It helps in increasing efficiency of office because filing helps in providing records in required time to make quick decisions
Filing helps in protection of important documents from fire, dust, insects, theft and mishandling.
Previous records are base of past records, and they are used as an immediate reference.
It helps in documentation of proof and legal evidence in the time of disputes
It helps in formulation of future planning
It helps in providing legal proofs to fulfill legal formalities
It helps in handling customers and correspondence carefully to maintain the goodwill of the office
It helps in taking feedback.

Requisites of business success

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Establishment of objectives:
There must be proper establishment of objectives. Objectives are the aim of business. It determines the scope of future work. Objectives must be clearly defined. It provides guidelines for doing work. Objectives are defined for long term and short term.

Proper planning and policy:
Proper planning classifies the works done. Planning and policy formation should be done in efficient way. There must be clear set of policies and programs to complete the work. It helps in minimizing risk and maximizing profit.

Proper location layout and size of business:
Proper location layout and size of business is needed for progress of business. Layout means planting the business in such a way that production work can be carried out with efficiency and true manner. It helps in determination of proper size of business. Location also should be suitable. It must attract the market.

Sound organization:
There must be division of work among employees. There must be effective use of human sills and knowledge. Organization should help to answer various business problems. It ensures team work. It must ensure the best communication channels for proper decision-making.

Separate finance:
Finance is the blood of business. Business can’t be established without sufficient capital. Volume of capital to be invested is dependent upon size of business firm. Source of capital must be properly taken into consideration. It must be flexible. It should be suitable for both long term and short term business.

Efficient management:
Its main objective is to manage all activities of human and other resources. It must perform right job at right time in right place. It must use effective management technique.

Employees morale:
The success of business depends upon employee’s morale. The business should be used with intensity of employees. Employee should be encouraged, motivate. They could complete their work heatedly.

Modern technology:
It brings/ uses modern technology. It provides new idea and methods in production process. There should be proper labor and capital adjustment.

Research:
It helps in improvement of product. It works under the taste, desire and preference of the customers. In it various marketing, strategies, skills, knowledge and experts are used. Research and development is the main way to achieve profit with customer satisfaction.

Office machine : meaning and importance

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Office machine
The rapid increase in the industrial activities has increased office work to the highest level. The machines were invented to reduce monotony and increase the efficiency of works done. They help to save time and labor. In modern offices, business completely depends upon the office machine and equipment. It increases the level of operation, improves the performances, safeguards the files, and increases the accuracy. Purchase, repair and maintenance of office machines require big investment. It is the duty of office manager to select the right type of machine. If they don’t select it properly then the office work won’t be efficient and effective.

Importance of office machine

1. To save labor: properly designed office machine saves labor. It helps in saving labor cost. Machines work faster than men. Total wage bill can be reduced.

2. To save time: machines work faster than men. The office machine helps to save time. The speed of official work is increased with the help of machine. It helps in completion of work in a faster way. It increases efficiency and effectiveness of work.

3. To provide accuracy: office machines works accurately. It increases in accuracy in all types of works. It reduces the error, fatigue and helps in supervision

4. To reduce chance of fraud: there may be barrier inside the organization. Machines help to check for the accuracy and correct method of works done t also keeps systematic records of all employees. Thus, it helps in reducing the fraud

5. To retrieve monotony of work: some jobs are routine in nature. They are repetitive in nature. Repetitive works are monotonous. Office machine s help in retrieving the monotony of the employees

6. To improve quality of work: office machines help to maintain the neatness, accuracy and quality of work done.

7. To increase goodwill: when there is saving of labor and time and increment of accuracy of works done, then there are fewer chances of errors and fraud which improves the quality of work done and helps in satisfaction of customer and the employees. This helps in increasing the goodwill of the office

8. To lower operating cost: office machines reduce the operational cost. It helps to reduce the wage bill. It also helps in reducing the excessive filing cost.

Importance of an office

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Some importance of an office are as follows:

1. Information center
An office is an information center which provides information relating to business transactions. Such information is very useful. It is used by management for the purpose of planning, organizing, staffing, directing and controlling.

2. Channel of communication
Office not only keeps record of information but also plays the role of reliable channel of communicating the information. It is required for smooth functioning of the organization.

3. Coordinating center
The success of business depends on the proper coordination of people and activities of the organization. It keeps relations with all departments and deal with information necessary for effective coordination; it is a mechanism or coordination.

4. Control center
An office acts as a control center. Controlling is the important function of management. It helps to monitor plans and policies which help in the implementation of proper working environment. It helps to prevent from unwanted deviations. It provides data for managing and correcting deviations.

5. Service center
An office works as a service center. It provides services to all the department of an organization. It provides necessary information to all the department of an organization. Business cannot operate successfully without better service system and office fulfills this requirement.

6. Memory center
An office is the storehouse of records. It keeps the records of past and present. It provides necessary information for future. It helps to report letters, circulars, notifications, policies etc. It is known as ‘brain’ of organization.

7. Help employees
An office provides wages, salaries to their employees. They also keep records of workers attendance, leave due, provident fund, and calculation of overtime. They also help to maintain the relationship between management and workers.

8. Office as intermediary
An office works as a middleman between department and outsiders. It links with supplier, customers, shareholders, government and general public. These office activities enhance the image of the firm.

Trade and Export Promotion Center : Functions

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Trade and export promotion center (TEPC)

Trade and export promotion center is a national trade promotion organization of Nepal. It was established in 2006. It is formed by merging three organizations. They are;

Trade promotion center
Export promotion center
Carpet and wool development board

Its main aim is to prevent foreign trade and export trade. It helps increase country’s export capacity. At initial stage it was limited with few countries. Afterwards, trade was extended with India. It helps to identify, promote trade. It helps in developing new market. It also helps in establishment of relationship between exporter and importer. It tries to maintain positive result. It links Nepalese product in international market.

Functions:

It provides advice to the government of Nepal in formulation of policies for the development and expansion of trade and export
It helps in expansion of export business and increases national economy
It tries to reduce poverty through developing rural economy by enhancing internal and external market for agro based and other products
It conducts programs for increasing the products of exportable products
It assists to diversify trade by identifying potential market for exportable products
It cooperates in operating institutions for export promotion and diversified trade and extend support to such institutions
It pleads for technical assistance with national and international organizations for improving quality and standard of exportable products
It organizes buyer and seller meet and conduct training seminar and workshop
It assists in market test of exportable products
It studies and identifies the problems of foreign trade and advises the government of Nepal with appropriate measures to solve those problems

Registration of Cooperative Organization in Nepal

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

A cooperative organization can carry out its functions only after its registration under the cooperative act 2048. For registration of cooperatives following procedures should be followed.

1. Preliminary meeting:
According to the cooperative act 2048 there should be at least 25 members to form a cooperative society. Preliminary meeting must be held before applying for the registration. The meeting is held in the presence of 25 members under 1 chairman among them. The following things should be discussed in the meeting:

Commencement of the business
The name and address of the society
The objectives of the society
The value of each share
Membership fee

2. Filing an application for registration
After preparing and passing proposed by laws and working schemes in the preliminary general meeting. In application should be submitted to the office of registrar, department of cooperatives, and government of Nepal

Following things are mentioned in the application form

Proposed name of society
Address
Objectives
Working areas
Liabilities
Total share capital
Total number of shares to be paid
Two copies of law of proposed society
Original copy of working scheme
Copies of citizen certificate
Application must be signed by chairman

3. Receiving the certificate of registration
After filing application for registration, certificate of registration is to be received. After applying application along with document, they are submitted at the registration office. Then the registrar checks all the documents. If the documents are satisfactory then registrar will issue certificate of registration. After receiving certificate of registration, the society can operate.

Legal provisions for dissolution of co-operative society

According to the cooperative act 2048 cooperative society can be dissolved under following circumstances

Two third majority of total number of society can take decisions of dissolution.
Registrar can dissolve it, if application with reasonable clause is received.
Registrar can dissolve it, if the society is found inactive and not operating for two years.
The registrar can dissolve it, if it is found operating against the law and objectives of it.

Considerations before starting a Business

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Business means the art of being busy. The aim of business is to earn profit. The higher number of industries has increased competition among the investors. Before starting the business, promoters must consider following factor in order to survive and expand the business.

1. Identification of business
The first factor that businessman must consider before starting a business is the identification of business. He has to decide about what type of business he wants to start. Identification and selection of particular business is very important for proper involvement and profit. It helps to give personal knowledge, interest, reduced level of risk, size and other values. It helps in expansion of business and earning the maximum profit.

2. Detailed investigation and research
Business cannot be started only by imagination. Proper and detailed study about the scope of business is very vital. It must consider present and future risks and competition. Market survey must be maintained. Investigation and study about raw material, finance, customer, market, employees and interest must be done.

3. Forms of business organization
There are different natures of business. The types of business vary with the differences in capital, interest, merits, demerits, risk sizes size and so on. It must be chosen from various different forms of organization like sole proprietorship, partnership firm, joint stock and so on.

4. Provision of capital
Capital means finance. Finance is the blood of business. Business cannot be established without sufficient capital. Volume of capital to be invested is dependent upon size of business firm. Source of capital must be properly taken into consideration. Capital is categorized into two groups.

Fixed capital i.e. Land, building, furniture etc.
Working capital i.e. Raw material, transactions etc.

5. Location of business:
Location means place where the business establishes. It is very difficult to migrate from location of business after it has been set up. Location of business where it has been established must have better transportation. Communication, water, electricity and other utilities. Production and distribution must have low cost and sales must be high to minimize the profit. Selection of location must be perfect.

6. Selection of staff:
Business deals with human activities. It is related to the utilization of people to perform different activities. It is also called staffing function. It helps in management of human resources. Human activities are the major source to determine the efficiency of business. Staff should be selected according o the nature of business. Success of business depends upon selection of staff. Capable, skilled, experienced and honest employees must be selected.

7. Office equipment:
Office is the place from where all administrative work of business has to be done. Therefore, office needs proper equipment, machines and resources. For accurate, speedy performance office setup must be good.

8. Government policy:
Government makes business policy for the welfare of people. It must follow the policy of government. It must know all the legal rules and regulation formulated by the government.

Types of cooperative organization

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

1. Producer co-operatives: Some co-operatives process and market their members’ products and services directly while others may also sell the input necessary to their members’ economic activities. Examples: Agriculture co-operatives, pooling of equipment, advisory services, etc.

2. Multi-stakeholder co-operatives: The membership of these co-operatives is made of different categories of members who share a common interest in the organization. Examples: home care services, health services, community services, etc.

3. Worker co-operatives: The purpose of these co-operatives is to provide their members with work by operating an enterprise. The co-operatives are owned by their employee members. Examples: forestry, leisure, production and manufacturing, tourism, communications and marketing, etc.

4. Worker-Shareholder co-operatives: These are incorporated co-operatives that hold partial ownership of the business in which the co-op’s members are employed. Because of its share capital, the co-operative may participate in the management of the business and the workers may influence work organization. Examples: production and manufacturing, technology, etc.

5. Consumer co-operatives: They provide their members with goods and services for their personal use. Examples: Food, credit unions, housing, insurance co-operatives, etc.

Social responsibility of business

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

The major responsibilities of business are:

1. Employees

Provides better working environment to satisfy the employees
It provides salary, bonus, provident funds and job security.
It also provides financial and non-financial supports.
Enriches employees’ performance.
Provide training to develop their skills.
listen and handle their complaints and issues

2. Creditors:

Make duly payment
Satisfaction of creditors with proper relationship
Helping them to create their own market.
Entrusting the right of proper selling of goods and services of their goods
Copyright and other legal rights.

3. Customers/consumers:

Better quality of goods and services by charging reasonable price
Supply of commodities is also to be done according to needs of customer
Helps to achieve needs and wants
Provide right goods at right place in right time.
Provide proper pre-sale and post sale information
Provide proper information about new products

4. Investors:

True information about earning power of business
The objectives are to provide reasonable rate of return to shareholder.
Provide the information about plan of business.
Ensure safe investment
Promote utilization of resources without leakage
Ensure transparency of business activities

5. Government

Increase in tax i.e. Increase in government revenue
Fulfill demand of government
Non violation of rules and regulation of government.
Avoid unfair trade
Provide essential information to the government.
Solve national problems like natural calamities.
Avoid malpractice like black marketing, adulteration, smuggling

6. Society

Good environment
Employment opportunities generation.
Socio-cultural understanding
Apply anti pollution measures.

Concept of joint stock company

Business Studies XI Notes — Sun, 18 Aug 2013 05:41:42 +0000

Meaning of Joint Stock Company

Joint stock companies first came into being in the 18th century in Britain, and were mainly concerned with foreign trade. Initially, the organizational form was viewed with suspicion, it being supposed that it encouraged managerial efficiency and corruption. A corporation, chartered by the state in which it is headquartered is considered by law to be unique entity, separate and apart from those who own it. A corporation can be taxed; it can be sued; it can enter into contractual agreements. The owners of a corporation are its shareholders. The shareholders elect a board of directors (BOD) to oversee the major policies and decisions. The company has a life of its own and does not dissolve when ownership changes.

A company is a voluntary association, an incorporated association, an artificial person created by law, having a common seal and perpetual succession. Shareholders are owners of the company but management lies in the hands of BOD. Company means a company registered under an act.

According to H.L Haney: “A joint company is a voluntary association of individual for profit, having its capital divided into transferable shares the ownership of which is the condition of membership.”